Shapoorji Pallonji Group's Afcons Infra IPO opens today: Should you apply?

Afcons Infrastructure IPO: The initial public offering (IPO) of Shapoorji Pallonji Group's flagship company, Afcons Infrastructure, opens for public subscription today. Afcons Infrastructure's IPO is a book-built issue of Rs 5,430 crore, comprising a fresh issue of 26,997,840 shares, and an offer for sale by promoter Goswami Infratech, divesting 90,280,778 shares with a face value of Rs 10 apiece. 

 

Afcons Infrastructure said that it has already raised Rs 1,621.50 crore from anchor investors as the bidding concluded on October 24, 2024.

 

The public issue of Afcons Infrastructure is available at a price band of Rs 440 - Rs 463, with a lot size of 32 shares. Accordingly, investors can bid for a minimum of 32 shares and in multiples thereof. The minimum amount required by retail investors to bid for the IPO is Rs 14,816. 

 

 

The minimum lot size investment for sNII is 14 lots or 448 shares, aggregating to Rs 207,424, and for bNII, it is 68 lots or 2,176 shares, aggregating to Rs 1,007,488.

 

Adding to the buzz, the unlisted shares of Afcons Infrastructure are commanding a positive premium in the grey markets ahead of their opening for public  subscription. Sources tracking grey market activities reveal that Afcons Infrastructure shares are trading at a premium of Rs 60, which translates to a GMP of 13 per cent against the upper end of the IPO price of Rs 463.

 

The three-day subscription window to bid for the Afcons Infrastructure IPO is set to close on Tuesday, October 29, 2024. Following the closure of the IPO subscription window, the basis of allotment for the company’s shares is expected to be finalised on Wednesday, October 30, 2024, and the company’s shares will be credited to demat accounts on Thursday, October 31, 2024.

 

Afcons Infrastructure shares are likely to make their market debut on Monday, November 4, 2024, by listing on the BSE and NSE.

 

Link Intime India is the registrar for the Afcons Infrastructure IPO, while Jefferies India, Nomura Financial Advisory and Securities (India), Nuvama Wealth Management, ICICI Securities, Dam Capital Advisors, and SBI Capital Markets are the book-running lead managers of the public issue.

 

Afcons Infrastructure intends to utilise the net proceeds from the public issue for capital expenditure toward the purchase of construction equipment, as well as for funding long-term working capital requirements. The company will also use the proceeds for the prepayment or scheduled repayment of a portion of certain outstanding borrowings and acceptances, as well as for general corporate purposes.

 

Should you subscribe to the Afcons Infrastructure IPO?

 

Marwadi Financial Services - Subscribe

Considering the TTM-June 24 EPS of Rs 12.25 on a post-issue basis, analysts at Marwadi Financial Services expect the company to list at a P/E of approximately 38x with a market cap of Rs 17,026.18 crore. Meanwhile, its peers—Larsen & Toubro, KEC International, Kalpataru Projects International, and Dilip Buildcon—are trading at P/E ratios of approximately 37x, 67x, 43x, and 42x, respectively.

 

"We assign a 'Subscribe' rating to this IPO as the company has a diversified order book across geographies, clients, and business verticals, along with longstanding relationships with global clients. Also, it is available at a reasonable valuation compared to its peers," wrote the analysts in a research note.

 

KR Choksey - Subscribe

Brokerage firm KR Choksey, in a research note, has assigned a 'Subscribe' rating to the Afcons Infrastructure IPO, citing that the company is strategically positioned for sustained growth within the infrastructure sector, capitalising on its extensive experience in executing complex engineering, procurement, and construction projects.

 

According to the brokerage, given its solid financials and proactive growth strategies, the company is positioned for a favourable valuation. The IPO is pegged at a P/E multiple of 36x. In light of Afcons Infrastructure's robust growth potential, solid financial performance, and strategic initiatives aimed at market expansion, KR Choksey recommends a ‘SUBSCRIBE’ rating for the company.

 

About Afcons Infrastructure

Afcons Infrastructure is the flagship infrastructure, engineering, and construction company of the Shapoorji Pallonji group. In FY24, EPC projects contributed 72.37 per cent, item-rate projects contributed 27.38 per cent, and cost-plus projects contributed 0.25 per cent to revenue. The company has successfully completed 79 projects across 17 countries, with a total historic executed contract value of Rs 56,305 crore. Currently, the company has 65 ongoing projects across 12 countries, aggregating to an order book of Rs 31,747 crore.